NJ's Comprehensive Medicaid Waiver on Track but Still Several Months Out

'Budget-neutral' waiver can deliver new Medicaid services as long as federal government contributes same amount.

New Jersey's request to overhaul its $11 billion Medicaid program via what's known as a "comprehensive waiver" from the federal government is on track but could take several more months to complete, according to a federal official overseeing the waiver request.

The waiver is intended to make improvements in the program, ranging from helping the elderly avoid nursing homes to reducing excess use of hospital emergency rooms, while saving the state money. The federal government has to approve of each of the changes the state Department of Human Services has planned before changes can be made because it funds 50 percent of the Medicaid program.

"I can't say if it will be two months, three months, five months," said Michael Melendez, associate regional administer for the U.S. Department of Health and Human Services, Division of Medicaid and Children's Health. "We sometimes speak to the state every week" about the Medicaid waiver, he added.

Melendez addressed a daylong AARP conference in New Brunswick, "Transforming New Jersey's Long-Term Care System," and he shared the podium with his Trenton counterpart, Jennifer Velez, commissioner of the state Department of Human Services. Velez submitted the state's waiver to the HHS Center for Medicare and Medicaid Services in September, and the federal government responded with 200 questions, asking for more information. Velez said the state is nearly finished with its responses. "It's a question and answer process," said Velez. "CMS has agreed to do some of this over the phone; we talk to them every week."

The state proposes shifting Medicaid's 30,000-plus nursing home and assisted living residents into managed care. Four managed-care companies, including a division of the state's largest health insurer, Horizon Blue Cross Blue Shield of New Jersey, already deliver Medicaid services under contract with the state to the majority of Medicaid's 1.3 million members. Velez said the goal of shifting all Medicaid patients to managed care is to improve coordination of medical care with the necessary social supports that are required by the elderly if they are to remain in their homes. These social supports include things like Meals on Wheels or the installation of ramps for wheelchair access. The hope is that the many changes outlined in the waiver, which also include coordinating the physical and behavioral health of those with mental illnesses, will increase the quality of care while also reining in a Medicaid budget that Velez said has risen 17 percent over the past three years.

Overall, New Jersey "does a very good job," with Medicaid, Melendez said, providing benefits that exceed the minimum required by federal regulations.

The waiver also seeks federal approval to launch Medicaid Accountable Care Organizations, modeled on work started nine years ago in Camden by Dr. Jeffrey Brenner, executive director of the Camden Coalition of Healthcare Providers. The coalition brings the city's three hospitals, its physician practices, and other social and medical services together to improve preventive care for those with chronic conditions like diabetes. It is these patients who often drive up Medicaid spending by making unusually high use of hospital care. "The Camden model looks like a very good one," Melendez said "How can we look at spreading it beyond Camden?"

Another program change proposes coordinating the care of "dual eligibles," those covered by both Medicare and Medicaid; Melendez said the government supports the concept of care coordination for dual eligibles.

Velez said about 70 percent of what Medicaid spends on long-term care in New Jersey now goes to nursing homes. Her goal is to "rebalance" that equation so that 50 percent of the money is spent on providing the elderly with what they need to remain in their homes. AARP is a strong advocate of enabling the elderly to get long-term care at home; an AARP survey found that more than 90 percent of New Jerseyans 50 and older want to remain in their homes and communities.

Melendez said his office is getting deep into the weeds of how the waiver might transform long-term care in New Jersey, looking at such issues as "How the state should set up a system to provide the level of care the patient needs in the least restrictive modality. How do we give you [the Medicaid member] everything you need and allow you to have your freedom in the least restrictive environment?"

One of the government's rules is that the Medicaid waiver must be "budget neutral," meaning it won't cost the federal government more if New Jersey get its waiver. Another federal requirement, Melendez said "is that quality be budget neutral: quality can't decrease from what's there now. We will not allow [quality] to go backwards."

State Sen. Joseph F. Vitale (D-Middlesex), who in January will succeed State Sen. Loretta Weinberg (D-Bergen) as chair of the senate health committee, said he's not concerned about turning long-term care over to the managed-care companies, which have been running the Medicaid program in New Jersey since the 1990's. "I think the managed-care companies have enough of a commitment and enough oversight to make sure they do this right," Vitale said, adding one result of managed care should be closer contact with patients, which should improve care.

But Vitale said he is concerned because through the waiver New Jersey is seeking more flexibility to make future program changes. "It seems when those decisions are made, they are financial decisions," Vitale said. "Giving the state too much flexibility, to me at least, is code for 'how do we spend less money."

He said that the state can certainly achieve its goal of helping more of the elderly to age in their own homes "but it's going to take resources." Vitale said home care works best when seniors have relatives who can keep an eye on them. "If you have a senior citizen who doesn't have a family member that wants to care for them and watch over them, that's going to be much more difficult. There are those who need to be institutionalized because of the seriousness of their illness and there are some who can certainly be at home. It's a matter of resources and having enough staff or having family members who are actively engaged in their well-being."

Velez said rebalancing seeks the level of choice that New Jerseyans want. "There is so much money that right now sits in buildings and institutions ," she said. "We are still going to need nursing homes, but we have to move some of that money into the community."

Right now Medicaid will pay for nursing home care, at an average of $200 a day, but until the state gets the Medicaid waiver approval, Medicaid won't install a ramp in a senior's home. "If the reason why I need to move into a facility and have care around me, have other people to do things for me, is [because I need] ramps and grab bars, well that is easy," Velez said. "But we can't get Medicaid to pay for it until we get the waiver."

Paul R. Langevin Jr., president of the Health Care Association of New Jersey, has argued that the state will need a strong system of nursing homes and assisted living facilities, even if it succeeds in keeping more of the elderly at home. He has said that if the elderly remain at home longer, they will be more ill and frail if they move to a the nursing home, where they will require more expensive care.

Weinberg said, "As we rebalance the expenditure of Medicaid funds, we will take care of people [at home] who are more appropriately taken care of and who chose to be taken care of in their own home environment." She said it's more economical to keep people in their homes, but the more expensive environment of the nursing home "is sometimes the more appropriate level of care that's needed."